Fidelity Launches Technology Evaluation Tool

The firm announced the launch of the Technology Benchmark Evaluator, which is designed to help RIAs benchmark their use and management of technology. The tool’s data comes from a recently released study, “Integrating Technology Best Practices in Your Business: Opportunities for RIA Firms, 2008,” conducted on Fidelity’s behalf by Moss Adams, according to a press release from Fidelity.

By entering firm-specific information in the tool—such as assets under management, size of staff, level of technology integration, and IT spending data—advisers receive a detailed report designed to help them better understand the relationship between their use of technology and the financial performance of their firms, according to Fidelity.

“Asset values have declined, yet advisers’ primary expenses—people and technology—remain largely fixed, likely cutting into their profit margins,” said Edward O’Brien, senior vice president, Fidelity Institutional Wealth Services, in the release. “As a result, enhancing profitability through greater efficiencies has become critical.”

According to the Fidelity survey, RIA firms of all sizes said that technology is one of the top three things they’d like to change about their business. Eighty-six percent of RIA firms indicate that technology is either a key factor affecting the success of their business or is critical to their success.

In order to benchmark an RIA firm’s overall technology effectiveness against the top-performing firms surveyed, Fidelity said its new tool gathers specific information in four areas:

• financials: Advisers provide information about their revenue, assets under management, profit margin, number of professionals in their firms, and total staff;
• technology utilization: Advisers are asked to characterize to what extent they deploy key hardware and software systems within their firms;
• integration: Advisers identify the functions performed in their practices and the corresponding level of integration—either using file transfers or real-time data-sharing;
• technology spending: Advisers estimate their expenses in areas including software, hardware, IT-related consulting or outsourcing, salaries for IT staff, and technology training.

Once all data have been provided, the tool produces a detailed report that shows how the RIA firm compares to top-performing firms surveyed across all four categories.

The report also will provide advisers some technology best practices from the top-performing firms surveyed. For example, Fidelity said many top-performing firms have a culture that more readily embraces technology and stay abreast of emerging trends in technology. They also understand the link between technology and employee satisfaction and place more value on the benefits of integration.